In Hong kong infact, services are 85% of the GDP. US, it is in and around 80% and growing.

Manufacturing is a volume game. A country gains precious little by being a manufacturing major. Mexico was one a while back. Now china is and mexico is struggling.

Manufacturing is a low tech activity which can be replicated in any country. The fact that it involves a huge investment upfront is the reason behind china’s huge FDI figures. But ultimately there is little value addition.

On the other hand, a 50 million that intel or texas instruments invest in India goes further since it adds to the knowledge of the employees which is priceless.

China’s is an FDI driven inorganic growth. Atleast half of china’s manufacturing factories are in foriegner’s hands. This has made many to remark that china is nothing but america’s economic colony.

India on the other hand is a domestic oriented country wherein exports as percentage of the GDP is little. This virtually shock proofs the economy from external factors.

The collective leadership that is fueling china’s growth today will have to go away in the future. Communism is not going to last long enough for china to become a developed nation. Once communism collapses and democracy begins to form in china, there will be a prolonged period of little or zero growth in the country’s economy.

That is when India will overtake china.